Wanted: New forms of trade partnership with Africa

German Chancellor Angela Merkel finishes in Nigeria a three day Africa tour with official visits to Senegal and Ghana to discuss bilateral economic relations and migration policies. [EPA-EFE/FELIPE TRUEBA]

After several months of different European leaders beating a path to the African continent, Jean-Claude Juncker’s European Commission has got in on the act. But for the moment, Brussels is not offering anything new on either trade or investment.

A plan for a new ‘EU-Africa alliance’ was the surprise at the heart of Juncker’s final State of the Union speech to MEPs in Strasbourg on Wednesday (12 September).

On Friday (14 September), three of his top team were wheeled out to put some meat onto the bones.

“We have shifted from a donor-recipient relationship,” said Federica Mogherini, the EU’s High Representative on foreign affairs.

“We always talk about Africa in terms of migration and security…the idea of this package is to focus on the opportunities,” Mogherini remarked.

It is noticeable that the Commission has been increasingly prickly about the perception that China has become the only game in town.

“We are already, by far, Africa’s first partner in trade and investment,” said Mogherini, noting that 36% of African trade is with the EU compared to 16% with China, and that 40% of foreign direct investment in Africa is from Europe, dwarfing the 5% from China

“I hear a lot about China…but it would be good for us to realise how important our relationship is with Africa,” she added.

But that does not shift the sense that the Commission’s grandiose-sounding ‘Africa-Europe Alliance’ is essentially a repackaging of initiatives that already exist, plus piecemeal programmes such as supporting an African Erasmus scheme to eventually enable 100,000 African students to access Erasmus+ – the EU’s student exchange scheme.

A trade alternative

While the Juncker blueprint talks about eventually having a continent-to-continent free trade pact, the existing regimes that govern EU-African trade – many of which African countries dislike – will stay unchanged.

The Commission has stated that the existing Economic Partnership Agreements (EPAs); trade deals with North African countries; and the “Everything but arms” agreement should form the ‘building blocks’ of trade.

Many experts, both in Africa and Europe, see European agricultural subsidies and lack of investment as the main reasons why trade relations between Europe and Africa disadvantage African states.

“Agreements such as the Cotonou Agreement undermine the industrialization agenda of Africa,” says Kwabena Boateng of the Third World Network, an international research and advocacy organisation.

“Instead of regulating their trade relations with individual African states and regions with different partnership agreements on different terms, the EU should support the creation of a Pan-African Free Trade Area.”

The Commission appears to be listening and has promised to provide €50 million in support to fund the African Union’s negotiation and technical work on its African Continent Free Trade Area (ACFTA).

Increasing trade between the EU and the ACP (African-Caribbean-Pacific), particularly African countries, lay at the heart of the ambition of the Cotonou Agreement. That was supposed to be embodied by regional Economic Partnership Agreements (EPA) with the EU.

Forty-nine African countries have signed the ACFTA, although much work is needed to harmonise rules on customs, tariffs, technical standards and rules of origin to make a pan-African trade area a reality. Recent surveys by the AU show that, so far, pan-African trade accounts for only 16% of Africa’s total trade volume, behind Asia (51%) and Latin America (19%).

According to the AU, customs duties are often higher for trade between African countries than for exports outside the continent. Pan-African trade relations consolidated through a free trade area could increase trade by 50% over the next five years.

Europe has to catch up, and open up

“What is missing is a coherent joint economic strategy,” said Development Commissioner Neven Mimica on Friday.

Mimica also complained that Europe’s preoccupation with “the migrant issue” had meant that its leaders were “often trapped into cliché when talking about Africa”.

But, for the moment, Europe is still not offering anything new when it comes to trade, and is offering new private investment programmes that are far smaller, but have more strings attached, than China.

In the meantime, it wants to push regional ‘disembarkation’ centres for migrants onto the African continent to create a new European external border.

The EU should open its “factually closed” markets to African products, German development minister Gerd Müller said ahead of his trip to seven African countries

The issue of how to control migration from Africa may have exorcised European leaders in recent years, but it could also derail the EU’s main political agreement with the continent.

“Germany might be strong. But the Chinese, Indians, Japanese, Turks and Russians are much more aggressive in their approach. We must act together as Europeans,” Müller said.

“The EU must also reshape the relationship of action with Africa. The competence lies in Brussels. In addition to private investment, the continent needs fair trade. There is no better economic stimulus for Africa.”

Juncker and his Commission appear to recognise that. But actions speak far louder than words.